How Big is the Handbuilt Bike Segment? Part III

Last time we looked at the total number of handmade bike builders in the U.S.…which turns out to be a pretty big number. Turning to output and value, estimation is even more challenging; without direct observation, we must rely largely on informed-insider opinion and observation. The following, then, is intended only as a “thinking out loud” first stab at putting some shape to this amorphous notion of the handbuilt segment. Any critique and suggestions for improvement/refinement will be more than welcome!

One highly-respected, long-time builder – who routinely speaks about the industry and informally advises other builders about the challenges of making a living, based in part on varied experience with multiple business models – estimates about 30-50 “professional” builders at any moment and a market segment of $10-20 million in sales annually. The term “professional” is intended to capture those building essentially full-time and trying to make a living by building bikes (relying on this as their sole or primary source of income).

Taking the top end of each of these informed estimates as a starting point, we can work up some broader estimates for the segment output.

If there are about 50 builders trying fairly successfully to work full-time, each with an average output of 50 frames a year (about one a week), we get 2500 frames each year. This is probably on the high end for many builders – or, I’m not sure that there are 50 builders working at this level of output, but some of this might be accounted for by averaging (some of those 50 builders might be putting out closer to 100 frames a year, while others might be closer to the 30s).

Let’s say that 60% of those frames are sold as complete builds (with wheels and parts installed) and 40% as just a frame set (the frame and fork), which seems like a reasonable rough guess based on my conversations with builders. I have also compiled (again thanks in part to the research assistance of Molly!) the average listed sales price for a frame or a frame/fork combination from the 258 builders on the paceline.net list discussed in my previous post.. While this is not an ideal sample drawn from the total number of builders (it is a convenience sample pulled from those making the pricing information available online, and there could be a systematic reason why those with high/low prices do/don’t post this information), it gives a very rough sense of pricing. The average frame cost alone is $1947 and $2528 with a fork. Splitting the difference gives us about $2200 for a frame/frameset sale. I will assume about $7500 for an average complete bike, given that wheels could easily fall in the $800-1500 range and a build kit combined with additional components might add another $4000.

Using these figures, we can work up the following, at the cost sold (which is not, of course, builder income):

For a total of $13.45 million in sales (and 2500 “units” of either frame or bicycle)

Let’s then say that there are another 100 builders in the 20 bikes a year range (e.g. 50 builders making 10 bikes a year, 50 builders making 30 bikes a year), for a total of another 2000 frame units output. Assuming the same 60 full build/40 frameset breakdown as before as well as the same cost breakdown (frameset is $2.2k, bike is $7.5k), we get:

For a total of $10.76 million in sales (and 2000 “units” of either frame or bicycle)

Adding the “professional” builders to the smaller-output (but numerically larger) builders gives us a rough annual estimate for the handbuilt segment of about $24.21 million in sales and 4500 frame-based units.

What is missing here?

Mainly the small number of mid-size handbuilt production or semi-custom shops with a significantly higher annual output (e.g. Seven, Independent Fabrication, Moots, CoMotion, Calfee, Waterford/Gunnar). While all of these are included in the builder count, I have not accounted for their output in the calculations above. There are comparatively so few of these mid-size shops that I will be asking for output estimates from each individually and can work up similar gross sales estimates from their published pricing.

How does this fit with other measures?

As I said originally, it would be great to gather multiple snapshots of the handbuilt industry to build a composite picture of its overall size. Another useful set of snapshots might come from those supplying materials to the trade, measuring, for instance, tubing sales, components and so forth. Indeed, building supplies (in addition to students enrolled in framebuilding courses) may be one of the few reliable longitudinal (over time) measures of industry size available. Thus far, I have made little progress in getting any of this information; I’m hoping that polite persistence may eventually pay off!

Another “check” on these back-of-the-envelope calculations comes from Jay Townley, of the Gluskin Townley Group (which provides most of the existing data on the U.S. bike trade). Townley has been quoted in a few articles as estimating that the handbuilt segment represents about 3% of the U.S. specialty bike market (and this is really to be taken as “no more than” 3%). With around 2.5 million bikes sold by bike shops in 2014 (NBDA 2014: 60), Townley’s estimate would equate to about 75,000 bikes a year….which is well beyond anything that my estimates of the handbuilt segment could approach. However, Townley is likely factoring in all different product categories (recumbents, travel and cargo bikes, handbuilt production bikes, etc.) in this estimate.

So there’s a first cut guesstimate at the size in output and value of the handbuilt bike segment in the U.S. Sound reasonable? Seem flawed? Suggestions for improvement/refinement? Ideas for alternative data sources? Feel free to comment here, or drop me a line privately – I’d love to chat!